Ever been in a scenario where your credit application has been turned down? Or you applied for any credit card and did not get one or received the same with a low credit limit? You have probably been asked to ameliorate your credit score and wondering ‘what a credit score is?’ Let’s take an in-depth look at this essential financial term and understand ways how you can opt for ‘free CIBIL score check’. Also, read on to understand steps on how you can conduct ‘CIBIL score check free online by PAN number’.
What’s a credit score?
To put this simply, a credit score is basically your credit report. This determines your credibility based on your repayment and borrowing patterns over the years through a variety of lending options like personal loans, credit cards, 4-wheeler loans, and others. Lenders depend aggressively on the credit score to compute the tenure, rates, and other crucial terms before providing a loan. A validated or authorised credit rating agency issues this.
While there are four Indian credit agencies (CRIF Highmark, TransUnion CIBIL, Experian, Equifax), TransUnion CIBIL is one of the most popular options available, and many synonymously call CIBIL score as credit score. A credit score is available on a scale of between 300 and 900, wherein 750 and above is considered the most preferred score by lenders.
What’s the importance of forming a good credit score?
When you place an application for any credit option like an overdraft, loan, or credit card from an NBFC or bank, they take a specific level of risk by providing you with the loan money you require. There is a reference check that endows the lenders with confidence regarding the loan repayment. The lender conducts this reference check through the means of your credit score.
Also Check: HDFC CIBIL Score
Depending on your previous track record as well as financial history, the lenders can gauge your credibility depending on your score and ascertain how much loan proceeds, repayment tenure and interest rate to offer you. A strong credit score infers your chances of availing approval for products like loans and credit cards may be higher. Also, you most likely may receive a competitive interest rate, higher loan limits and better payment terms.
How can you review your credit score?
A constantly googled query on the browser is ‘how to check credit score’. Remember that what used to be considered a tedious and cumbersome procedure years ago now is smooth and swift. You can review your credit score easily directly by approaching the credit agency’s site and inputting your basic details like name, email, mobile number, and PAN, to generate your report. You can review your score for free. With a paid subscription, you can view other relevant info about the report too. There are various financial and banking service aggregator sites that even permit you to review your score for free. You can also check your score through the respective credit bureaus’ sites. However, note that just one report per credit bureau is available for free. If you want to fetch more than one report, you must pay the credit bureau. Remember for fetching your report, you must input your PAN card detail.
What is the info available in your report?
A credit report is issued by the credit rating agency that contains all info about your personal loan, credit cards, 4-wheeler loan, home loan, etc. that you availed. The available info is not only for the active loans but even for the ones that you availed in the past with their status, like closed, pre-closed, defaulted and others.
Besides the above, the report even contains the listed –
Personal info – name, PAN, birth date, Aadhaar and other important identification numbers.
Contact details – email, address, phone numbers.
Account details – Kinds of credit availed, loan account number, institution’s name, duration of the loan, the amount borrowed, dates of repayment and borrowing, the amount repaid, etc.
Employment info – Annual salary and various other information as reported by financial institutions.
Enquiry info – When you make the loan application, the lender queries the rating agency to get to know your score and other details.
CIBIL report, being widely used in our country, is available in distinct languages like Hindi, Malayalam, Tamil, Telugu, and Kannada, besides English.
What causes low credit scores?
Missed or delayed payments and defaulting on credit options are crucial factors that cause an adverse impact on your score. Another reason is borrowing from several lenders one after another, as your capacity to repay may be the major question. Once the credit score is impacted owing to such parameters and other crucial causes, it can take several years to rebuild the same and make you eligible to apply for other credit options on good terms and conditions.
Having zero credit history and making many loans or credit card enquiries without borrowing may even result in a poor score. It is a big myth that never using a credit option, may keep your score intact or good. If you do not use a lending option, then you will hold zero credit history. This infers zero credit score.
In case you hold a score on the lower end, timely EMI repayments are one of the effective and simplest means for holding a strong score. Making complete payments in place of partial repayments even helps. Optimum usage of credit card limits is another recommended practice for increasing your score. However, ensure to repay your credit card due in full by the due date if you want to increase your score. In case you do not, then your score may fall drastically. Also, it is recommended to thoroughly review your credit report annually to keep a good track of your financial health.
It is not uncommon event to get loans and various other lending options to meet your unplanned and planned financial needs. To stay prepared for this, you must know where you financially stand, which you can understand by reviewing your credit score.